Lead Opinion
Insurаnce agents C. Daniel Hurlbut and A.C. Hovater sued their former employer, Gulf Atlantic Life Insurance Company, its parent corporation, and several corporate officers for fraud, business disparagement, and tortious interference with contract rights. The trial court rendered judgment for actual and exemplary damages against all defendants. On this appeal defendants contend that all claims asserted are barred by limitation as a matter of law. We
FACTUAL BACKGROUND
Both plaintiffs had an insurance agent’s license and a local recording agent’s license from the Insurance Board. Also, both plaintiffs were agents for defendant Gulf Atlantic Life Insurance Company before the events leading to the present suit occurred. Plaintiff Hurlbut had been a regional manager for Gulf Atlantic in Houston. Plaintiff Hovater had been an independent insurance agent with experience in mass-marketing of individual cancer insurance, life insurance, and accidental death and disability policies to groups of employees. Hovater had a letter of introduction from the Southern Regional School District Association, which gave him access to groups of school employees. Hovater began representing Gulf Atlantic as an agent early in 1974.
In April 1974 a meeting was held in Gulf Atlantic’s Dallas office between plaintiffs and the individual defendants. Those Gulf Atlantic employees present included defendant William Barnes, president; defendant Earl Smith, secretary; defendant Ralph Curtis, vice president for marketing; defendant Kenneth Thompson, agency vice president; and defendant Harold W. Watson, director of mass marketing. Also present was defendant Jack Warner, vice president for marketing of defendant Nationwide Corporation, the corporate parent of Gulf Atlantic. At this meeting it was proposed that Hurlbut and Hovater join their efforts in an association to be known as “Agency Associates” for promotion of mass marketing of Gulf Atlantic’s insurance policies. According to defendants, the discussion was confined to mass marketing of individual cancer, life, and accidental death and disability insurance policies, chiefly to groups of school employees to whom Hovater had access by his letter of introduction from the Southern Regional School District Association. According to plaintiffs, there was also a discussion of group health insurance policies to be marketed on a trust plan by which several small groups of employees could combine to obtain one group health insurance policy. According to this arrangement, a bank would act as trustee, plaintiffs would act as administrators, and Gulf Atlantic would underwrite the plan and issue a group health insurance policy to cover all the employees of the participating groups. Plaintiffs would then sell this group health insurance program to various school districts and other agencies or groups. Plaintiffs would also collect the premiums, deposit them in the trust account, deduct commissions and expenses (including claims), and pay over any balance to Gulf Atlantic. Defendant Warner acknowledged that he was familiar with such arrangements, and he agreed to send sample trust documents to plaintiffs for their use. Defendant Barnes, president of Gulf Atlantic, instructed plaintiffs to work through defendant Thompson, Gulf Atlantic’s agency vice president, to establish this program.
After this meeting, plaintiffs set up an agency office in Houston with funds advanced by Gulf Atlantic. They employed as bookkeeper and office manager Roy Bengel, who had experience in this type of business. With Bengel, plaintiffs formulated a schedule of rates and benefits and prepared various forms to be used in presenting this group health insurance program. Defendant Warner sent plaintiffs copies of one or more trust agreements used in similar group insurance programs. Plaintiff Hovater inquired of defendant Thompson concerning an attorney to prepare the proposed trust document and Thompson referred him to Ira Allen, a Dallas lawyer. Accordingly, plaintiffs sent Bengel to Dallas and to meet with Allen in June 1974. Bengel gave Allen a proposed typewritten trust 'document designated
It is clear from the record that all of the parties knew that before Agency Associates could begin selling this group health insurance that: (1) a master policy had to be approved by the Insurance Board; (2) an insurance trust had to actually be established by Agency Associates; and (3) a licensed insurance company had to agree to underwrite the insurance program and actually issue the approved master policy to Agency Associates and the trustee. However, according to Hovater, Gulf Atlantic was anxious to start selling this program to school districts before school started in September 1974. In June or July of 1974 Thompson urged plaintiffs to “get some business going.” Hovater tеstified that he assured Thompson they would do so “as soon as you give me the word,” and Thompson then told him, “You have the word. Start selling.” This is the statement that plaintiffs say they took as authorizing them to sell group health insurance for Gulf Atlantic through the Nation-Wide Health Insurance Trust.
When plaintiffs started selling, they knew that no master policy had been issued. Plaintiffs assert that they relied on Gulf Atlantic to file the master policy and obtain its approval by the Insurance Board. Hovater testified that when he inquired about Board approval, defendant Smith, secretary of Gulf Atlantic, whose duty it was to obtain the necessary approval of policy forms, gave him a copy of a proposed policy to be issued to the “West Texas Pipe Trades Health Insurance Trust” and stated that Agency Associates policy would be “virtually identical.” According to Hurlbut, Smith assured him and Hovater that they need not worry about the master policy because getting it approved and issued was just a matter of “paperwork” as it was identical to a policy that Gulf Atlantic was already using for other trusts with no problems. Both plaintiffs testified that they made weekly inquiries to Thompson concerning the status of the master policy and that he assured them that everything was in order. Furthermore, according to Bengel, plaintiffs’ bookkeeper, all promotional materials, including a schedule of rates and benefits, were examined and approved by Thompson before printing. Relying on these assurances and approvals, plaintiffs began selling group health insurance under the Nation-Wide Health Insurance Trust in August 1974 and continued to do so until January 1975. Plaintiffs sold this insurance even though they had not even established a Nation-Wide Health Insurance Trust bank account. In addition, plaintiffs collected premiums, but they did not deposit them in a trust account, as none had been established; they deposited them in Agency Associates’ checking account. Bengel prepared monthly statements of the premiums collected which, he testified, he sent regularly to Thompson in Dallas. When plaintiffs contacted school representatives and others in their sales program, they responded to any inquiry concerning their authority to sell the program by suggesting that such inquiries be directed to defendant Barnes in Dallas.
The program proceeded in this manner through December 1974. Despite Thompson’s repeated assurances, no master policy was ever furnished. In late December Wayne Holder, city attorney of Freeport, Texas, made a telephone call to Barnes inquiring about the master policy. Holder testified that both Barnes and Thompson told him that Gulf Atlantic was not underwriting the Nation-Wide Health Insurance program. Holder reported this information to Hurlbut and also to Texas Attorney Gen
At Flanary’s request, plaintiffs accompanied him to a local office of the Attorney General in Dallas and cooperated in the investigation. Flanary immediately filed suit in the district court of Brazoria County for a temporary injunction restraining plaintiffs from selling group health insurance under the Nation-Wide Health Insurance Trust and for a receivership of Agency Associates. Plaintiffs signed an agreed order granting the injunction and authorizing the receiver to take over their assets. Also, a proceeding was begun before the Board of Insurance Commissioners, which issued an order revoking their licenses on the ground of their selling unapproved insurance. There is no evidence of who initiated these proceedings. Both plaintiffs were indicted by the grand jury in Harris County for misapplication of premium funds paid to them by the Pasadena Independent School District. There is no evidence of who initiated these criminal charges. These indictments were dismissed on the ground that these charges amounted to double jeopardy because of the earlier proceedings to revoke their licenses.
Plaintiffs’ petition alleges that they sustained damages to their reputation because of the receivership, the license revocations, the criminal prosecutions, and the attendant publicity. Both plaintiffs testified about substantial damages in these respects.
FRAUD
The evidence varies substantially from the fraud asserted in Plaintiffs’ petition, which alleges that at the time of the original meeting in Dallas in April 1974 defendants “engaged in a conspiracy to increase business and take advantage of the relationship which plaintiffs had with the many school districts in the central and southern part of the United States.” They alleged various “overt acts” done in furtherance of this conspiracy, and specified various “causes of action” based on these acts. With respect to fraud, the petition alleges:
a. Fraud, in that misrepresentations were made by the Defendants to induce the Plaintiffs to enter into the establishment of a general agency (Agency Associates) for the purpose of writing an insurance trust to various school districts and other multiple employers, and advising plaintiffs that they should now proceed to issue said policies in late Summer or early Fall of 1974 and but for these fraudulent misrepresentations of the Defendants, Plaintiffs would not have issued said policies to their damage and detriment as herein alleged.
At the trial, plaintiffs presented no evidence of a conspiracy formed in April 1974 to defraud them by taking advantage of their relationship with the school districts. Plaintiffs testified that all parties appeared enthusiastic about the program at this original meeting. So far as the evidence shows, defendants remainеd committed to the program until difficulties developed several months later.
At most, the evidence shows the following. Defendant Thompson told plaintiffs to “start selling” insurance under the proposed Nation-Wide Health Insurance trust in July or August 1974 when Gulf Atlantic had no master policy filed and approved by the Insurance Board. Gulf Atlantic failed to get such a master policy approved; therefore, it was unable to furnish a master policy to plaintiffs. Then, when Holder made inquiry of Barnes about the master policy for the city of Freeport and, again, when the assistant attorney general undertook his investigation, Barnes and the other defendants denied that they had ever authorized plaintiffs to sell group health insurance through a trust plan for Gulf Atlantic. This denial left plaintiffs in the
In answer to special issues, the jury found that each of the defendants “fraudulently represented to plaintiffs that plaintiffs were authorized to write group health insurance through a trust arrangement to be underwritten by Gulf Atlantic Life Insurance Company.” The jury further found that this fraudulent representation was a proximate cause of damages or loss to plaintiffs. The jury also found that each of the defendants entered into a conspiracy to defraud plaintiffs by making such representations and that this conspiracy was a proximate cause of plaintiffs’ damages. The jury answered “we do not” in response to special issue number 27:
Do you find from a preponderance of the evidence that Plaintiffs knew or by the exercise of ordinary care should have known of the fraud, if any, of the Defendants on or before January 20, 1975?
Since the suit was filed January 21, 1977, an affirmative answer to this issue would have barred recovery on the fraud claim under the two-year statute of limitations. In the trial court, defendants moved for judgment in their favor notwithstanding this finding on the ground that the evidence established as a matter of law that plaintiffs knew or should have known of the fraud on or before January 20, 1975. They urge that contention again on this appeal.
The law is well settled that a cause of action for fraud accrues when the plaintiff discovers the fraud or has knowledge of facts which would cause a reasonably prudent person to make inquiry that would lead to discovery of the fraud. Knowledge of such facts is in law knowledge of the fraud itself. White v. Bond,
According to the petition, the representation that plaintiffs “should now proceed to issue said policies” on which plaintiffs relied was made “in late Summer or early Fall of 1974.” Hurlbut testified that this reрresentation was made in June or July. Plaintiffs rely on this statement as a representation that they were authorized to go ahead with their marketing activities for the Nation-Wide Health Insurance Trust. These activities began in August 1974. It is undisputed, however, that in December or early January 1975 plaintiffs knew that they were not authorized to write insurance for Gulf Atlantic in August and, therefore, that defendants’ initial representations were false. Their petition expressly alleges:
It was not until the latter part of 197⅛ when Plaintiffs learned for the first time that, in truth and in fact, Gulf Atlantic had not underwritten said program and that the policies of insurance which had been sold through the insurance trusts to various school districts were improper and wrong. Even after a letter was received in November, 1974 from Ira Allen and contact had been made with the Defendant Thompson of Gulf Atlantic, Gulf Atlantic was still assuring the Plaintiffs that it was all right to proceed with the writing of said insurance and that Gulf Atlantic had the “muscle” in Austin, through its attorneys, to take care of any questions that might arise. Plaintiffs, as insurance men, knew that said policies had to be approved by the State, but since it is the normal function of the insurance company to approve said policies, Plaintiffs believed that said policies had been so approved. The approval of said policies was a matter within the total control of the Defendants; and, therefore, Plaintiffs felt justified in relying upon said representation. [Emphasis added.]
We conclude that this allegation that plaintiffs learned late in 1974 that Gulf Atlantic had not underwritten the pro
Actually, this allegation is entirely consistent with plaintiffs’ evidence as presented. Plaintiffs made no attempt to prove that they did not discover, before January 21, 1975, their lack of authority to sell group health insurance for Gulf Atlantic in August 1974. They insisted, rather, that they relied on defendants’ repeated assurances that the necessary filing would later be made with the Insurance Board and that the master policy would eventually be issued. Thus we find nothing in the evidence that would explain or avoid the effect of the quoted admission in plaintiffs’ petition.
On this appeal defendants contend, as they did in the trial court, that they are entitled to judgment notwithstanding the jury’s answer to special issue number 27 because the evidence shows as a matter of law that plaintiffs knew or should have known before January 1,1975, that defendants had made false representations to them concerning their authority to sell group health insurance for Gulf Atlantic. We agree. Taking the evidence most strongly in plaintiffs’ favor,
Plaintiffs contend that the evidence only raises a fact issue as to whether plaintiffs “knew or should have known of the fraud” because of defendants’ continued assurances that a master policy would be forthcoming. We cannot agree. Defendants’ subsequent assurances, at most, would raise an issue as to whether defendants are estopped from pleading the statute of limitations in bar of this suit. Plaintiffs did not plead estoppel in the trial court, nor did they request a special issue presenting to the jury this ground for avoiding the bar of the statute. Consequently, plaintiffs have waived this issue. Furthermore, because the individual defendants in their testimony denied giving the assurances on which plaintiffs allegedly relied, estoppel cannot be established as a matter of law.
We recognize that where the discovery rule is applicable, as in suits for fraud, and the petition does not affirmatively show that the cause of action accrued more than two years before the suit was filed, the defendant has the burden of establishing that the cause of action accrued at such a time as to be barred by limitation. Whatley v. National Bank of Commerce,
The same rule applies when the limitation defense is not raised by the petition, but is established by the evidence as a matter of law and the plaintiff seeks to interpose an estoppel to avoid the limitation defense. Nichols v. Smith,
This distinction between application of the discovery rule and avoidance of the limitation defense by estoppel to plead limitation was also recognized in Borderlon v. Peck,
For these reasons, we sustain defendants’ third point, which asserts that the jury’s answer to special issue number 27 should be disregarded, and hold that the evidence establishes as a matter of law that plaintiffs knew or should have known of the falsity of defendants’ representations more than two years before the suit was filed.
BUSINESS DISPARAGEMENT
(1) One-Year Statute of Limitations
Defendants contend that the trial court erred in failing to disregard the jury’s answers to the issues submitting plaintiffs’ theories of business disparagement and tor-tious interference with contract rights because these claims, having their basis in defamatory utterances, are barred by the one-year statute of limitations, TEX.REV. CIV.STAT.ANN. art. 5524(1) (Vernon 1958). This statute requires that actions “for injuries done to the character or reputation of another by libel or slander” be commenced and prosecuted within one year after the cause of action has accrued. The parties stipulated that any claim by plaintiffs for libel or slander is barred by article 5524(1). Accordingly, we must determine whether the claims as pleaded and proved should properly be regarded as claims for libel or slander.
We conclude that plaintiffs’ disparagement claim is in its essence a claim for slander. The petition alleges that in April 1974 defendants agreed with plaintiffs to engage in mass marketing of group health insurance through an insurance trust program to school districts and other groups of employees and that plaintiffs proceeded to market this program in accordance with defendants’ instructions, but that defendants failed to file the master policy underwriting the program with the Insurance Board and gave false information to the Board and to the Attorney General to the effect that defendants were not involved in this insurance trust program. Plaintiffs alleged that this false information caused plaintiffs’ insurance licenses to be revoked and that, by intentionally presenting false evidence to the Attorney General and the grand jury, defendants caused indictments to be returned against plaintiffs, knowing that such false evidence would lead to plaintiffs’ arrest on criminal charges. The petition alleges further that by virtue of
have been held up to public ridicule and contempt, have been branded as common criminals, have had their insurance licenses revoked, are unable to secure any type of job which would pay them commensurate with their ability and experience, have suffered severe and extreme hardship in the support of their families, and are unable to practice their profession as licensed insurance agents.
On the basis of these allegations, plaintiffs assert various causes of action, including “[disparagement of each of the Plaintiffs’ trade and calling ... in that Defendants, as hereinabove alleged, have disparaged thе abilities and reputations of each of the Plaintiffs causing them to lose their licenses.” The petition alleges that each plaintiff is entitled to recover “actual damages for loss of earnings, injury to their reputation, emotional distress, damages from the tortious interference of the contracts, and loss of property” in the sum of $1,200,000.
Defendants pleaded “that plaintiffs’ causes of action are barred by limitation as respect their entire cause of action.” They specifically pleaded the one-year statute, article 5524, “as respects the claim of slander.”
The only false statements alleged in the petition as a basis for the damages claimed are those alleged to have been made to the Attorney General and the Board of Insurance Commissioners. At trial plaintiffs introduced evidence that Wayne Holder, city attorney of the city of Freeport, made a complaint to the Attorney General and to the Board of Insurance Commissioners concerning plaintiffs’ failure to produce a master policy evidencing Gulf Atlantic’s underwriting of group health insurance for the employees of the city. As a result of this complaint, Bill Flanary, an assistant attorney general, undertook an investigation, and in the course of this investigation met with plaintiffs and some of the defendants in the offices of Gulf Atlantic in Dallas on January 21, 1975. At this meeting defendant Barnes told Flanary that plaintiffs had no authority to write group health insurance for Gulf Atlantic through a trust plan. Also, the record contains a sworn statement given by Barnes in February 1975 to Flanary and another assistant attorney general in which Barnes states that he knew nothing about the proposed NationWide Health Insurance Trust until late December 1974 and that he had never approved any group health insurance for plaintiffs or any group to whom plaintiffs had purported to sell such insurance. There is no evidence that any of defendants testified before the Insurance Board or the grand jury in Harris County.
The record does show that immediately after the meeting on January 21, Flanary filed suit in the district court of Brazoria County asking for the appointment of a receiver to take over all of plaintiffs’ assets and that plaintiffs signed an agreed order granting this relief. The receiver so appointed later turned all these assets over to the liquidator for the Insurance Board, who applied them to payment of claims against the Nation-Wide Health Insurance Trust. The record also shows that the Insurance Board revoked plaintiffs’ licenses on the ground that they were selling unapproved insurance, but does not reveal the evidence presented to the Board as a basis for that action. The indictment under which Hurl-but was arrested charges him with “misapplication of Fiduciary Property.” Specifically, this indictment alleges that Hurlbut misapplied premium payments made to him by the Pasadena Independent School District. The indictment undеr which Hovater was arrested charges him with “theft” of money, presumably premium payments, from the Pasadena Independent School District. There is no evidence in the record to indicate who made the complaints resulting in these indictments.
All of plaintiffs’ evidence of damages relates to the results of the receivership, the loss of their licenses, their indictment and imprisonment, and the attendant publicity. Plaintiffs testified that these actions destroyed their business and means of livelihood, alienated their friends, and
In charging the jury, the trial court defined the term “to disparage the trade or calling” as “the making of a statement concerning a person’s services or business which is untrue and/or misleading which statement is made for the purpose of influencing other persons not to do business with or use or purchase Plaintiff’s services.” The jury found that each of the defendants entered into a conspiracy to disparage the trade or calling of plaintiffs and that this conspiracy was a proximate cause of damages or loss to plaintiffs. The jury further found that each of defendants individually disparaged the trade or calling of plaintiffs and that these acts were done with malice and were a proximate cause of damages or loss to plaintiffs. The damage issues inquired generally what sum would reasonably compensate each plaintiff “for his actual damages ... resulting from the events in question.” In these issues the jury was instructed to consider “[l]oss of earnings, loss of earning capacity, effect on reputation and mental anguish.” In argument to the jury, plaintiffs’ counsel made no attempt to show by calculations based on any of the testimony what plaintiffs’ actual pecuniary loss had been. Instead, they stressed the damages to plaintiffs’ reputations resulting from the unfavorable newspaper publicity and plaintiffs’ humiliation and mental anguish at being unable to care for their families in the manner to which they were accustomed. The jury answered all the issues in plaintiffs’ favor and found actual damages of $1,200,000 in favor of each. Defendants moved for judgment notwithstanding the verdict on the ground, among others, that the disparagement claim was barred by the one-year statute of limitations applying to libel or slander. Defendants bring these contentions forward by appropriate points in their brief on this appeal.
We agree that the disparagement claim is barred by limitation. Clearly, Barnes’ statements to Flanary were defamatory to plaintiffs’ characters and reputations personally rather than merely disparaging to their business. Taken in context, these statements charge plaintiffs with fraud and the crime of selling unapproved insurance. In the light of Flanary’s inquiry, Barnes’ statement to Flanary that plaintiffs were not authorized to write group health insurance for Gulf Atlantic through a trust was equivalent to a charge that plaintiffs’ activities were fraudulent and illegal, since Barnes knew that plaintiffs had been representing themselves as agents of Gulf Atlantic. The Insurance Code provides various criminal penalties that would have been applicable if Barnes’ statement had been true. TEX.INS.CODE ANN. art. 21.15-3 & 21.15-5 (Vernon 1981). Article 21.15-3 imposes a criminal penalty on an agent who procures payment of an obligation for an insurance premium by fraudulent representations. Article 21.-15-5 provides that an agent who collects premiums for an insurance company lawfully doing business in this state and ap
Such a charge was expressly characterized as defamatory by plaintiffs in their petition. Plaintiffs alleged that as a result of this false information plaintiffs “have been held up to public ridicule and contempt” and “have been branded as common criminals.” A communication is defamatory if it tends to harm the reputation of another or to lower him in the estimation of the community or to deter third persons from associating or dealing with him. RESTATEMENT (SECOND) OF TORTS § 559 (1977). Actionable slander is defined to include several distinct categories of oral defamation, among which are false statements imputing to another the commission of a crime and those affecting another injuriously in his business, profession, or occupation. Braugh v. Enyart,
Although it is important to distinguish between personal defamation of the plaintiff on the one hand and disparagement of his property on the other, it is not always easy to do so. If the statement charges the plaintiff with personal misconduct, or imputes to him reprehensible personal characteristics, it is regarded as libel or slander.... On the other hand, if the aspersions reflect only upon the quality of what the plaintiff has to sell, or the character of his business as such, it is merely disparagement, and proof of damage has always been essential to the cause of action_ The difficulty in the distinction between the personal aspersion and the commercial disparagement lies in the fact that many statements effectuate both harms. It might be possible to imply some accusation of personal inefficiency or incompetence, at least, in nearly every imputation directed against a business or its product. The courts have gone to some lengths, however, in refusing to do so, particularily where the most that can be made out of the words is a charge of ignorance or negligence. Personal defamation is found only where the imputation fairly implied is that the plaintiff is dishonest or lacking in integrity, or that he is deliberately perpetrating a fraud upon the public by selling a product which he knows to be defective.
Prosser and Keeton § 128, at 964-65. See also RESTATEMENT (SECOND) OF TORTS § 623A comment g (1977); Hibsch-man, Defamation or Disparagement, 24 Minn.L.Rev. 625-34 (1940).
In Texas, the difference between defamation and business disparagement has been recognized by the courts. Thus the owner of a business may be libeled, but not the business itself. Newspapers, Inc. v. Matthews,
In distinguishing between personal defamation and disparagement of business, the type of damages claimed is significant. Libel or slander is actionable without proof of special damages; thus no specific economic loss need be proved. Braugh,
Difficulty arises in cases where both general damages to personal reputation and special damages to a particular business are alleged. The Restatement recognizes that although the two torts impinge on different interests, they may overlap in some fact situations, so that an action may be brought for both in the same suit so long as the damages are not duplicated. RESTATEMENT (SECOND) OF TORTS, § 673A Comment g (1977). When the suit does not purport to be brought for both, and one is barred by limitation, the court must decide which tort is claimed. This question must be determined from the factual allegations of the petition, the evidence adduced in support of these allegations, and the type of damages alleged and proved rather than merely from the use of the term “disparage” in the petition or in the court’s charge. Otherwise, any plaintiff having a claim for oral defamation concerning his business practices, a well-recognized category of actionable slander, Braugh,
A simple solution to this problem would be to apply the limitation statute governing libel or slander to the injurious falsehood whenever it is personally defamatory, as distinguished from one that injures only business or property interests. This approach has been adopted in New York, where it is held that false statements having a direct tendency to injure the plaintiff’s reputation in his profession and business give rise only to a cause of action for slander. The New York court held that “a person possessing a cause of action in libel or slander may not avoid the statute of limitations applicable to such a cause of action by the device of claiming that the cause of action is an action on the case to which a longer statute of limitations is applicable.” Dubourcq v. Brouwer,
To hold that the complaint makes out a cause of action for injurious falsehood, which is in the nature of an action on the case, would permit plaintiff to escape the statute of limitations applicable to libel actions by the simple expedient of terming his action one on the ease instead of one for libel.
In the present case, however, we need not go so far as to hold that the one-year statute applies whenever a false statement disparaging a business interest is also personally defamatory, although this result would seem to follow from the language of article 5524(1), which prescribes the one-year limitation period for action “for injuries done to the character or reputation of another by libel or slander.” We hold, rather, that in determining whether the one-year statute applies to a defamatory or disparaging statement, a plaintiffs pleadings and proof must be examined to see whether the primary gravamen of the tort is an injury to the plaintiffs personal reputation, and whatever damages ensue from that injury, or whether the gravamen is a direct injury to the plaintiffs business or property. In making this determination, it is important to consider whether the plaintiff alleges that he has been falsely charged personally with criminal and dishonest conduct. Likewise, it is important to consider whether the damages sought are general damages for injury to personal reputation, humiliation, and mental anguish, all of which are typical of an action for defamation, as distinguished from specific damages to a particular business or property interest. If the main complaint is a false charge of personal misconduct and the damages alleged and proved are primarily personal and general, then the claim must be regarded as one for libel or slander within article 5524(1), even though incidental or consequential business or property losses are also pleaded and proved. On the other hand, if the main complaint is a false statement directly injurious to a business or property interest, and the damages alleged and proved are limited to business or property losses established with the specificity required for these sorts of damages, then the claim may properly be considered as one for business or property disparagement, even though aspects of personal defamation may be incidentally involved. Under this rule, the injured party may sue for both torts in the same suit so long as he avoids duplication of damages, as the Restatement recognizes. Similarly, if the defamation claim is barred because of its shorter limitation period, the disparagement claim will not be barred by the shorter limitation period so long as the injured party does not plead allegations and proof typical of an action for defamation.
This analysis is consistent with Brown v. American Freehold Loan Mortgage Company,
We conclude that the injury alleged and proved here is a general injury to each plaintiff’s personal reputation resulting from charges of fraudulent and criminal conduct rather than special injury to their business. No evidence was offered of damages resulting from loss of business expected from any particular customer or prospective customer to whom disparaging statements were made by defendants. The
In short, this suit has been pleaded as a slander case, proved as a slander case, and submitted to the jury as a slander case, with only formal use of the term “business disparagment” instead of slander. We cannot accept the view that defendants have waived this point by failing to object to the damage issues. Defendants pleaded the one-year statute in bar of the disparagement claim, moved for judgment on that ground, and urge that bar on this appeal. We hold that any recovery allowed for the “business disparagement” alleged here is barred by the one-year statute as a matter of law.
(2) Liability for Statements to Public Officials
In addition to the one-year statute, defendants have presented other grounds establishing that recovery for “disparagement” is precluded as a matter of law. Plaintiffs alleged that the disparaging statements in question were made to the Attorney General, the Board of Insurancе Commissioners, and to the grand jury in Harris County “with the knowledge that the Attorney General of Texas, the State Board of Insurance, and the Grand Jury, would act upon these representations in a manner adverse to the Plaintiffs.” Defendants contended in the trial court, and also here, that “such problems and related damages as Plaintiffs may have suffered came at the hands of the proper state officials, and not these Defendants.” They also contend that the disparaging statements made to Flanary are privileged and cannot form the basis of a suit for damages.
We agree. Plaintiffs have cited no authority, and we have found none, holding that a party may be held liable in damages for giving false information resulting in adverse action by a judicial or quasi-judicial agency. The law is well established that ordinarily no action for damages lies for a statement made in the course of a judicial proceeding, though the language be false and published with express malice. This rule applies to communications to law-enforcement officers and to agencies exercising quasi-judicial powers. Reagan v. Guardian Life Insurance Co.,
Plaintiffs contend that any claim of privilege is waived because defendants requested no issues or instructions to the jury on this defense. This contention raises the question of whether an absolute privilege is an affirmative defense on which defendants had the burden of proof. We conclude that it is not an affirmative defense where, as here, both pleadings and evidence show that the statements complained of were not actionable. We recognize that a defendant has the burden to plead and prove a qualified privilege in order to cast on the plaintiff the burden to establish malice. Denton Publishing Co. v. Boyd,
The rule of privilege as applied to absolutely privileged communications is not founded on the theory that the communications furnish any defense, but on the fact that the law allows absolute privilege or immunity on account of the occasion upon which the communications is made.
In view of these authorities, we hold that plaintiffs’ petition on its face and their own evidence show that defendants are not liable for any false statements made by defendants to the assistant attorney general or to the Board of Insurance Commissioners.
TORTIOUS INTERFERENCE WITH CONTRACT RIGHTS
Some of the same grounds that bar plaintiffs’ recovery for “business disparagement” also apply to their claim for tor-tious interference with contract rights because both claims are based on the same allegedly false and disparaging statements. Since these statements were personally defamatory, in that they had the effect of charging both criminal conduct and fraudulent business practices, and the damages sought resulted from injury to plaintiffs’ reputation, the one-year limitation period provided by article 5524(1) bars recovery although the claim is designated as one for tortious interference. Moore & Associates v. Metropolitan Life Insurance Co.,
Also, since the statements in question were made to the Attorney General and the Board of Insurance Commissioners, according to the allegations of the petition, the same immunity to liability for damages exists as in suits for defamation. Prosser and Keeton § 129, at 989.
In addition to these matters, other insurmountable obstacles lie in the way of plaintiffs’ recovery for tortious interference with contracts. Plaintiffs have not alleged or proved any contract rights with which defendants interfered, other than Gulf Atlantic’s own breach of contract with them, and plaintiffs have asserted no claims for breach of contract.
In their petition plaintiffs alleged: “Tor-tious interference with the contractual rights of the Plaintiffs in that the Defendants engaged in a course of conduct for the
Plaintiffs offered in evidence none of the contracts on which they base any “contractual rights” with which defendants allegedly interfered. In order to establish a right of action for tortious interference with existing contract rights, there must be in existence a valid contract subject to that interference. O'Connor v. Glitsch Engineering & Sales Corp.,
The same difficulty exists if plaintiffs’ claim may be considered one for interference with prospective economic advantage rather than with existing contract rights. The economic benefits expected were commissions from Gulf Atlantic for acting as its agents in selling group health insurance to “cities, school districts, and other similar firms,” rather than from any prospective contractual relationships between plaintiffs and the prospective policyholders. Plaintiffs’ only arguably established relationship was evidenced by Hovator’s letter from the Southern Regional School District Association. Plaintiffs rely on this letter only as providing “access” to school officials. Any loss of value of this relationship resulted from the general injury to plaintiffs’ reputation because of the receivership, license revocations, and criminal prosecutions rather than from any interference by defendants with plaintiffs’ relationship with particular school officials. Consequently, plaintiffs have not established any right to recover damages for tortious interference with any relationship between plaintiffs and third parties from whom plaintiffs expected substantial economic advantages.
Finally, no proper damages for tortious interference have been proved. The measure of damages for interference with contracts is the same as for breach of contract — the court attempts to put the plaintiff in the same economic position he would have been in had the contract not been breached. Armendariz v. Mora,
Plaintiffs’ petition not only alleges claims against defendants individually for fraud, “business disparagement,” and tortious interference with contract rights, but also alleges that defendants entered into a consрiracy to engage in such tortious conduct. In response to special issues the jury found that all defendants entered into a conspiracy to commit each of these alleged torts and that this conspiracy was a proximate cause of damages or loss to plaintiffs. In their motion for judgment and in this appeal, defendants contend that these findings are without support in the evidence and should be disregarded. We do not reach these contentions because of our holding that plaintiffs’ claims against the individual defendants are barred by limitation and by the other considerations stated in this opinion. The gist of a civil conspiracy is the damage resulting from commission of a wrong that injures another and not the conspiracy itself. Schlumberger Well Surveying Corp. v. Nortex Oil and Gas Corp.,
We recognize an apparent exception to this rule in cases that involve a combination between defendants to refuse to deal with the plaintiff. In such cases acts committed by several persons in concert may constitute an actionable wrong, although the same acts by an individual would not be wrongful. Delz v. Winfree,
THE STATEMENTS TO WAYNE HOLDER
In the foregoing discussion we have not considered the evidence of the statements made by defendants Barnes and Thompson to Wayne Holder, the city attorney of Free-port, that Gulf Atlantic was not underwriting the Nation-Wide group insurance program as bearing on the disparagement and tortious interference claims because, as we interpret plaintiffs’ trial petition, it does not allege these statements as the basis for those claims, but rather attributes all of the damages alleged to Barnes’ later statements to Flanary and to the Insurance Board, which resulted in the receivership, license revocations, and criminal proceedings. If the petition is subject to the interpretation that these statements to Holder are alleged as a basis for the disparagement and interference claims, there are other reasons why these statements provide no ground to support the trial court’s judgment.
First, although we recognize that these statements are not protected by the absolute privilege applicable to statements made to a judicial or quasi-judicial agency, any cause of action based on these statements to Holder is barred by the two year statute of limitations because they were known to plaintiffs more than two years before the suit was filed. Hurlbut admitted in his testimony that Holder advised him in December 1974 that he had talked to Barnes and that Barnes had told
Second, no damages were proved as the result of any disparaging statements by defendants to Holder, as distinguished from damages resulting from the subsequent proceedings for receivership, license revocation, and criminal prosecution. Plaintiffs lost no commissions expected from their arrangements with the city of Freeport because the evidence shows that plaintiffs obtained group health insurance coverage from another carrier, and there is no evidence that this coverage was on terms less advantageous than the terms plaintiffs expected to obtain from Gulf Atlantic. However, even if plaintiffs subsequently lost commissions expected from these arrangements, that loss was the result of the subsequent legal proceedings rather than directly from defendants’ statements to Holder.
JUDGMENT
The judgment of the trial court is reversed, and judgment is rendered that plaintiffs take nothing by this suit against any of the defendants.
Reversed and rendered.
Notes
. Plaintiffs’ evidence on this issue is summarized in detail in an unpublished supplement to this opinion.
Dissenting Opinion
dissenting.
I cannot agree that the actions pleaded and proved should be considered claims for liable and slander, as characterized by both the majority and by the appellants and barred, therefore, by the one year statute of limitations. Neither can I agree that plaintiffs’ actions were barred as a matter of law because the defendants failed to submit a jury issue on limitations with respect to disparagement, conspiracy to disparage the plaintiffs’ business, or with respect to tortious interference with plaintiffs’ contracts, as well as a conspiracy to interfere with plaintiffs’ contracts. Indeed, the only limitations issue submitted to the jury was relevant to the fraud issue and that issue was answered in favor of the plaintiffs and against the defendants. Neither can I agree that the plaintiffs’ suit was predicated upon a privileged communication or that a privileged communication need not be called to the trial judge’s attention in any way and then be relied upon by the defendants as a ground for reversal and rendition, аs the majority has chosen to hold. In my view, the privilege here is an affirmative defense which has been waived by the defendants. Apart from waiver, I find it untenable to reverse a trial judge on a ground not called to his attention.
Because my view' of the facts differs in some respects from that of the majority, I find it necessary to recite the facts which, I believe, are established by a fair reading of the record. The relationship between the parties commenced before any of the alleged wrongful conduct occurred. Hurlbut was the regional manager for Gulf Atlantic in Houston from 1967 to 1974, when the venture from which this litigation emanates commenced. Hovater was an independent insurance agent with extensive experience in marketing group insurance policies and with extensive connections with school districts and municipalities in thirteen states. Hovater had been employed by a subsidiary affiliate of Gulf Atlantic for a short time in 1973. While in this capacity, Hovater became acquainted with Pat Anglin, a regional vice-president of Gulf Atlantic with responsibility for overseeing Gulf Atlantic’s general agency operation. In early 1974, Anglin brought Hova-ter and Hurlbut together because he thought that they would make a “good team” for Gulf Atlantic’s change in marketing concepts, referring specifically to Hovater’s concept of marketing group policies to employees of school districts and municipalities.
Accordingly, Anglin arranged a meeting between Hurlbut, Hovater, the top executives of Gulf Atlantic, and defendant John Warner, the vice-president of marketing for Nationwide Corporation, Gulf Atlantic’s
Although the evidence concerning the April 1974 meeting at the Gulf Atlantic office in Dallas was disputed in some respects, the following facts are undisputed. At the meeting it was suggested that a trust
In reliance upon Thompson’s instructions, plaintiffs commenced selling and issuing certificates of coverage under the Nation-Wide Health Insurance Trust to individual employees of numerous municipalities and school districts. Throughout, plaintiffs made monthly reports and ac-countings of all funds received and disbursed, which records were delivered directly to Gulf Atlantic’s Thompson by Roy Bengel, Agency Associates’ bookkeeper.
From this point, some aspects of the evidence are disputed, but evidence exists supporting the following version of the facts. Sometime after sales commenced, plaintiffs began receiving requests from insured groups for a copy of the master policy. Upon receipt of each of these requests, plaintiffs contacted Gulf Atlantic’s
While this was transpiring, plaintiffs had called upon Arthur Tipton, deputy superintendent of the Humble Independent School District, with respect to the Nation-Wide Health Insurance Trust program, which was supposed to be a group health policy underwritten by Gulf Atlantic. Tipton contacted Thompson at Gulf Atlantic’s home office in Dallas to verify that Gulf Atlantic was underwriting the program. According to Tipton, Thompson verified the existence of the trust and of the master policy, the nature of plaintiffs’ business, and that Gulf Atlantic was underwriting the program.
Nevertheless, plaintiffs continued to be plagued by problems relating to the program since they could not secure the master policy. In one instance, because they could not produce a copy of the master policy, upon demand of the City of Free-port, Texas, plaintiffs put up $10,000 in an effort to protect the city from loss until the master policy was received. Plaintiffs referred Wayne Holder, the city attorney, to Thompson at Gulf Atlantic for confirmation. When Holder called Thompson he was unavailable, but Holder was able to reach Gulf Atlantic’s president, Barnes, in December of 1974. Barnes denied emphatically that Gulf Atlantic was underwriting the program.
Earlier, in August of 1974, at or near the time that plaintiffs were instructed to begin selling, Gulf Atlantic had filed a similar master policy called the West Texas Pipe-fitters Trust. Plaintiffs had been given a copy of this trust, with the explanation that theirs would be the same. As originally submitted, the West Texas Pipefitters Trust policy was a general purpose filing and would have covered the groups solicited by the plaintiffs. The general purpose filing was withdrawn on November 20, 1974, and a single filing substituted after the insurance board refused to approve the policy as originally submitted. This policy was not finally approved until February 7, 1975. An investigation was subsequently made concerning this policy and Gulf Atlantic was fined $3,000.00 for failing to obtain approval of the policy before beginning sales under it.
Barnes’ denial of knowledge of the Nation-Wide Health Insurance Trust, Agency Associates, or Hurlbut and Hovater, may be explained by Gulf Atlantic’s difficult position with the insurance board in Austin. This denial by Gulf Atlantic prompted the city attorney of Freeport to call the Attorney General of Texas, John Hill, who immediately assigned Assistant Attorney General Bill Flanary to investigate Agency Associates, Nation-Wide Health Insurance Trust, and plaintiffs.
Flanary testified that he came to Dallas on January 11, 1975, to meet with Barnes of Gulf Atlantic. Barnes denied to Flanary knowledge of Agency Associates and of the Nation-Wide Health Insurance Trust, and denied that Gulf Atlantic was involved with either or with any other group health program. At this meeting, Flanary asked Barnes to maintain complеte secrecy of the meeting, and Barnes agreed. After this meeting, Flanary conducted a detailed investigation of the activities of Hovater and Hurlbut.
As a result of this investigation, Flanary became convinced that Hurlbut and Hova-ter were selling group health insurance illegally and thus were civilly and criminally accountable. Flanary conveyed this information to Gulf Atlantic. The evidence supports an inference that by this time Gulf Atlantic and Warner of Nationwide had set about to insulate themselves and
Thereafter, Warner of Nationwide Corporation arranged a meeting to be held in Gulf Atlantic’s office in Dallas on January 21, 1975, to “straighten out” the NationWide Health Insurance Trust matter. The date of this meeting is pertinent to defendants’ plea of limitations. Plaintiffs were told that if they would attend, all problems would be put to an end. Contrary to these assurances, when Hovater and Hurlbut arrived at the meeting, they were directed to a conference room in which Flanary of the Attorney General’s office was waiting. After introductions, Flanary instructed Hova-ter and Hurlbut to accompany him to the Attorney General’s Dallas office.
At the Attorney General’s office, Hova-ter and Hurlbut willingly gave statements concerning their involvement with the entire program and gave the Attorney General names of persons who could substantiate their statements. They also furnished the Attorney General with a copy of the West Texas Pipefitters Trust. Flanary told them that, pending a verification of these facts, the State of Texas would seek a receivership over their personal estates as well as over Agency Associates and the NationWide Health Insurance Trust.
With this information in hand, Flanary returned to Gulf Atlantic’s office to recheck the information previously given to him by Barnes. Barnes again confirmed that Gulf Atlantic did not write group health insurance, but when Flanary confronted him with a copy of the West Texas Pipefitters Trust and suggested that perhaps the wrong persons were under investigation Barnes refused to discuss the mat-: ter further.
Thereafter, Attorney General John Hill left office, as well as his assistant Flanary, who had no further connection with the investigation. But Flanary testified that before he left the Attorney General’s office, he cooperated with the Harris County District Attorney’s office in presenting criminal charges against Hurlbut and Ho-vater before a grand jury, which indicted plaintiffs before Flanary discovered the actual complicity of Barnes, Gulf Atlantic, and others connected with the defendаnts here. This indictment resulted in extensive media coverage both in newspapers and on television, much to the humiliation of plaintiffs, as well as their families. As a further result, plaintiffs’ contracts with the insured groups were declared illegal, the Nation-Wide Health Insurance Trust was liquidated, and both plaintiffs lost their insurance licenses and were reduced to public humiliation and poverty.
BUSINESS DISPARAGEMENT
I cannot countenance the majority’s arbitrary characterization of the plaintiffs’ disparagement claim as one for slander. Plaintiffs clearly pleaded a cause of action for disparagement, introduced evidence relevant to a disparagement claim, submitted to the jury special issues appropriate to a disparagement claim, and obtained favorable answers to those special issues. The majority blithely disregards all of this in concluding that plaintiffs’ cause of action was not really for business disparagement after all, but rather was a cause of action for slander. I disagree with both the majority’s perceived need to re-classify plaintiffs’ disparagement claim and the conclusion they reach in so doing.
It is undisputed that an action for business disparagement is in many respects similar to an action for defamation. Restatement (Second) of Torts, § 623A, comment g; Prosser and Keeton, The Law of Torts, 5th Ed. § 128 at 964 (1977). In some fact situations the two torts may overlap. Restatement (Second) of Torts, § 623A,
The actionable statements made by defendants furnished to Hurlbut and Hovater a basis for claims of both business disparagement and defamation. They could have sued for both torts so long as damages were not duplicated. Plaintiffs chose, however, to sue for only one of these torts— disparagement. They stipulated at trial that any claim for slander was barred by limitation. These facts apparently provoked the majority to state, without citing supporting authority, that “[w]hen the suit does not purport to be brought for both [torts], and one is barred by limitation, the court must decide which tort is claimed.” I disagree with the majority’s statement. It is well settled that pleadings are sufficient if they give the opposing attorney fair notice of the claim involved. Castleberry v. Goolsby Building Corp.,
I also disagree with the majority’s conclusions concerning the issue of privilege. It is important to note that thе tort of business disparagement occurred when Barnes and Thompson made statements to Holder, city attorney for the City of Free-port, to the effect that Gulf Atlantic was not underwriting the group health insurance sold by plaintiffs. These statements set in motion the chain of events leading to plaintiffs’ receivership and loss of earnings. Defendants were liable for the reasonably foreseeable consequences of their tortious statements. Arroyo-Colorado Navigation District v. State National Bank,
I turn now to defendants’ contention that there was insufficient evidence to support the finding of disparagement. To assess this claim, I must consider whether there was sufficient evidence to establish each of the elements of a disparagement action. The Texas business disparagement cases have not set forth explicitly the elements of business disparagement; however, Walker v. Ruggles has set forth the elements of a slander of title action, an action which, as Walker expressly states, also falls under the rubric of interference with prospective economic advantage.
A plaintiff has the burden to establish all of these elements. The plaintiffs in this case have sufficiently done so. Defendants’ statements to Holder that they had not authorized plaintiffs to sell group health insurance and that, in fact, they did not know plaintiffs constituted the required utterance and publication. The evidence supports the jury’s finding that these statements were false. As noted above, defendants made these statemеnts deliberately and without reasonable cause, and, therefore, under the standard of Kidd v. Hoggett, maliciously. I shall discuss below in detail the damages that plaintiffs have suffered. It will be clear from that discussion that plaintiffs have produced ample evidence of the special damages defendants’ statements caused. Finally, defendants’ statements denied the existence of business relations between Gulf Atlantic and the plaintiffs and hence were clearly related to plaintiffs’ business. Accordingly, I conclude that plaintiffs’ evidence was sufficient to establish business disparagement.
CONSPIRACY
Gulf Atlantic and the other defendants argue that there was either no evidence or insufficient evidence to support a finding of a conspiracy against them. I do not agree. I conclude that there is evidence to support an inference that Hovater and Hurlbut were the victims of a conspiracy to conceal defendants’ illegal issuance of insurance policies and to shift the blame to plaintiffs, which conspiracy resulted in the destruction of their insurance business, as set forth below.
Civil conspiracy is defined by the supreme court as “a combination by two or more persons to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means.” Schlumberger Well Surveying Corporation v. Nortex Oil & Gas Corporation,
Gulf Atlantic contends that there is no evidence to support these elements of conspiracy. However, in conspiracy cases there is rarely any direct evidence revealing the conspiratorial activities. As the supreme court has noted:
When men enter into conspiracies, they are not likely to call in a witness.... In such cases the injured party must necessarily have recourse to circumstantial evidence. For it is only by the inferences and deductions which men properly and naturally draw from the acts of others in such cases, that their intentions can be ascertained. They are not likely to proclaim them in the hearing of witnesses.
International Bankers Life Insurance Co. v. Holloway,
This plan to cover up Gulf Atlantic’s and Nationwide’s violation of the insurance laws began when the city attorney for Freeport, Holder, called Barnes at Gulf Atlantic in December of 1974, and Barnes denied any knowledge of plaintiffs’ trust and that Gulf Atlantic was underwriting it. Thompson learned of this call, and later Warner received a phone call from Barnes concerning their problem. In early January of 1975 Holder called the Attorney General’s office, which began an investigation of the plaintiffs. During this investigation, Barnes again denied knowledge of plaintiffs’ trust and of Gulf Atlantic’s participation and also denied that Gulf Atlantic wrote group insurance, specifically denying knowledge of the West Texas Pipefitters Trust master policy. After the meeting between Flanary and Barnes, William Smith, Gulf Atlantic’s Secretary, called the plaintiffs, who had a copy of the West Texas Pipefitters Trust, and told them to “burn it.” Plaintiffs did not know, however, that Gulf Atlantic had intended to use the same master policy for both trusts.
In furtherance of their efforts to shift the focus from their own wrongdoing, the defendants, acting chiefly through Warner, set up the January 21, 1975, meeting at which plaintiffs were confronted by Assistant Attorney General Flanary. Plaintiffs were enticed to this meeting by Barnes’ and Warner’s continued assurances that they could get the problems worked out. At this meeting, Barnes and the other representatives of the companies present denied plaintiffs’ authority to write group
As a result of the investigation, Flanary filed a lawsuit on behalf of the State of Texas against the plaintiffs. Proceedings also began before the State Insurance Board to revoke plaintiffs’ licenses and the case was referred to the Harris County grand jury which returned indictments against Hovater and Hurlbut. In these last two proceedings, some of the individual defendants appeared and gave testimony against the plaintiffs.
The evidence establishes, therefore, that the defendants combined to employ unlawful means, viz., the instigation of an unwarranted prosecution against plaintiffs and the attendant destruction of plaintiffs’ business, in order to accomplish the common purpose of concealing defendants’ role in the illegal issuance of the Nation-Wide Health Insurance Trust policies. Each of the defendants, as representatives and agents of both Gulf Atlantic and Nationwide Corporation, knew the purpose of this conspiracy to conceal and each engaged in “overt acts” to further the conspiracy after the West Texas Pipefitters Trust master policy had been disapproved. It may be inferred that each defendant knew of the import of his actions and had intent to particpate therein. Thus, every element needed to prove a finding of civil conspiracy is supported by competent evidence.
FRAUD
Next, Gulf Atlantic asserts that there is no evidence or insufficient evidence to support the jury’s finding of fraud. Gulf Atlantic also contends that the jury’s answers to special issues 1 and 4 should have been disregarded because the plaintiffs could not have justifiably relied upon the alleged representations of Gulf Atlantic because they had actual knowledge that no master policy had been approved and that the trust was not complete. In this respect, Gulf Atlantic denies that the alleged misrepresentations were made to plaintiffs and argues that, in any event, plaintiffs failed to prove the necessary elements of reliance and intent. I do not agree. In my view, there is evidence, as set forth, supra, to support the jury finding of fraud and that plaintiffs have established all elements necessary to recovery.
To establish actionable fraud one must prove: (1) that a material misrepresentation was made; (2) that it was false; (3) that, when the speaker made it, he knew it was false or made it recklessly without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by the party; (5) that the party acted in reliance upon it; and (6) that the party thereby suffered injury. Wilson v. Jones,
The first question is whether material misrepresentations were made. Special issue number 4, to which the jury answered “we do” as to each defendant, inquired about the alleged misrepresentations as follows:
Do you find a preponderance of the evidence that any of the following Defendants fraudulently represented to Plaintiffs that Plaintiffs were authorized to write group health insurance through a trust arrangement to be underwritten by the Gulf Atlantic Insurance Company?
This special issue is somewhat unclear, but in light of the pleadings and evidence, I conclude that it is asking essentially whether defendants made two different false representations to plaintiffs: first, that all necessary approvals had been obtained from the underwriting company and the insurance board and, therefore, plaintiffs were legally authorized to sell group health insurance under the proposed master policy and trust arrangement; and, second, that defendants intended to underwrite the trust arrangement for the group health
Gulf Atlantic next argues that plaintiffs failed to establish justifiable reliance because of their knowledge concerning the master policy and the trust. Assuming, without deciding, that reliance in a fraud case must be justifiable, I shall consider the evidence. Plaintiffs may have known at some point before January 21, 1975, that the master policy had not received authorization from the insurance board. Defendants assured plaintiffs, however, that defendants would obtain the necessary approval. These misrepresentations kept the plaintiffs misled and thereby prevented them from learning that defendants had abandoned any intention to secure approval for the master policy or to underwrite it at all. As to their knowledge of the trust, plaintiffs testified that they had executed the trust instrument, had the corporate trustee execute it, and then had forwarded it to attorney Allen for completion. Allen informed them that Gulf Atlantic was reviewing it, although Gulf Atlantic later denied knowledge of the trust. A fully executed copy of the trust was not introduced at trial; however, there was testimony that such an instrument was seen in the files of the attorney. Plaintiffs had no knowledge about the trust which would have made reliance on defendant’s misrepresentations unjustified.
With respect to defendants’ argument of unjustified reliance, defendants also contend that the plaintiffs had no right to rely on representations which proposed an illegal contract between Gulf Atlantic and plaintiffs. I do not agree. In Oakes v. Aetna Casualty,
INTERFERENCE WITH CONTRACTUAL RELATIONS
I now turn to Gulf Atlantic’s contention with respect to tortious interference with contractual relations, it must be established that: (1) there is a contract subject to interference; (2) the act of interference was willful and intentional; (3) such intentional act was the proximate cause of plaintiffs’ injury; and (4) actual damage or loss occurred. Armendariz v. Mora,
Gulf Atlantic next contends that any acts or statements on its part were not shown to have caused the third parties to breach their contracts with plaintiffs. Interference with contractual relations includes not merely the procurement of a breach of contract, but all invasions of contractual relations, including any act injuring or destroying persons or property which retards, makes more difficult, or prevents performance. Tippett v. Hart,
Gulf Atlantic argues, however, that even if its acts interfered with plaintiffs’ contractual relations, there can be no recovery because all such contracts were illegal. Thus, Gulf Atlantic contends that there can be no legally protected rights in such a contract citing Guaranty Bank v. National Surety Corp.,
Gulf Atlantic also asserts, as a defense to plaintiffs’ claims, that any actions taken by it were justified on the grounds that a
In concluding this section, I would hold that the record supports the jury findings that defendants tortiously interfered with plaintiffs’ contractual relations. Furthermore, I would hold that defendants have not established any defense to defeat plaintiffs’ recovery.
ACTUAL DAMAGES
Gulf Atlantic contends next that the jury’s findings of actual damages are erroneous. These findings, in Gulf Atlantic’s view, have insufficient support, both legally and factually, in the evidence and are excessive. Gulf Atlantic also argues that a remittitur is in order. I disagree. Accordingly, I would overrule Gulf Atlantic’s contentions with respect to the jury’s award of actual damages and decline to hold the damages excessive.
The trial court submitted two issues inquiring as to the actual damages sustained by Hovater and by Hurlbut. These issues were identically phrased except that one referred to Hurlbut whereas the other referred to Hovater. The issue was as follows:
What sum of money, if any, if paid in cash, do you find from a preponderance of the evidence would fairly and reasonably compensate [the plaintiff] for his actual damages, if any, you have found from a preponderance of the evidence resulting from the events in question? In arriving at your answer, you may consider the following elements of damage and none other: Loss of earnings, loss of earning capacity, effect on reputation and mental anguish.
In response to the issue, the jury found that Hovater and Hurlbut should each receive $1,200,000.00.
Our authority to determine whether the damages awarded are excessive is derived from our authority to determine whether fact findings are supported by sufficient evidence. TEX.R.CIV.P. 440 grants us authority to order a remittitur as a condition of denying a new trial. Under rule 440, in determining whether damages are excessive thus requiring remittitur, the jury’s finding should first be examined to determine if the evidence is sufficient from a factual standpoint because the supreme court has stated that the court of appeals’ power to pass on questions of excessive damages stems from its jurisdiction over questions of fact. Pan Lip Chew v. Gilliland,
I note, however, that the supreme court decision in Wilson v. Freeman,
All the court of civil appeals can do and all that is required of it to do ... is to exercise its sound judicial judgment and discretion in the ascertainment of what*114 amount would be reasonable compensation for the injury sustained, and treat the balance as excess.... [Having made this determination] it should authorize a remittitur of the excess above the amount which would be reasonable compensation from the injury, in accordance with its sound judgment.
See also Flanigan v. Carswell,
In my view, the evidentiary test set forth in more recent supreme court decisions has tacitly overruled the Wilson approach because the evidentiary test of more recent cases precludes an undue interference with the jury’s broad discretion to assess damages within the range of the evidence. Under the Wilson test, a court of appeals decides what it thinks the proper amount of damages should be and then compares that amount with the findings of the jury. This approach gives the courts of appeals power beyond that necessary to implement a re-mittitur. The power to order a remittitur is granted so that when an appellate court determines that the amount of damages awarded in a case is the only error in a judgment, it may order the excessive amount of damages remitted. By a remit-titur the expense of reversing the case, thus requiring a new trial, is obviated. Our concern from an evidentiary standpoint should be only whether the evidence supports the verdict rather than whether we would prefer to see a different amount of damagеs awarded. Of course, if the evidence is found lacking, a remittitur must be ordered to reduce damages awarded measured by the evidence adduced.
My research in the area of excessive verdicts and remittiturs discloses that the issue of excessive verdicts has been confused with questions of jury misconduct. An expression of this confusion is found in the following quotation from Wharf Cat, Inc. v. Cole,
On appeal, the findings of the jury will 'not be disturbed on the ground of “exces-siveness” if there is any probative evidence to sustain the award unless the record shows that the minds of the jurors were so controlled by passion, prejudice, or bias as made them unwilling to consider the case on its merits, to the end result that the award is so excessive that it shocks the conscience of the appellate court.
See also Hernandez v. Braddock,
With respect to this analysis, the supreme court has held in World Oil Co. v. Hicks,
The confusion resulting from intermingling the question of jury misconduct and the evidentiary question of whether the verdict is excessive is apparently the result of the following dicta in World Oil:
There are cases where a shockingly excessive verdict, and the record as a whole, leaves no room for doubt that the minds of jurors were so controlled and dominated by passion and prejudice as made them incapable of, or entirely unwilling, to consider a case on its merits. The remedy in such a case is to set the verdict aside and refuse remittitur.
This language was also quoted in Dallas Railway. A large verdict alone should not indicate impropriety. To hold to the contrary would prompt attack on all but the most niggardly verdicts on the basis that they are indicative that the jury acted improperly. On law review commentator has suggested that the proper interpretation of the dicta in World Oil is to read the phrase “shockingly excessive verdict,” and “the record as a whole” together. Smith, Texas Remittitur Practice, 14 S.W.L.J. 150, 160 (1960):
If the dictum in World Oil is interpreted to mean that the court of civil appeals may remand a case in which the error alleged on appeal is that of excess, but in which the record plainly indicates other prejudicial error as well as an excessive verdict, the dictum may be fitted into the scheme of remittitur practice. Implicit in their meaning is the assumption that the reviewing court determines that the other errors in the record establish the jury found improperly on liability as well as damages.
I agree with this interpretation of World Oil because the analysis of excessive verdicts and jury misconduct should be segregated.
Finally, in my examination of cases on excessive verdicts, I note that conflicts exist among cases as to whether verdicts in other cases should be examined and compared with the verdict under examination. Gulf Atlantic suggests that we utilize this comparative approach. I would decline to do so because I agree with those opinions holding that the comparative approach is unhelpful due to the impact of inflation on the vlaue of the dollar and refuse to be bound by earlier cases which were decided when the dollar held a greater value. The comparative approach must be rejected for yet another reason. Obviously, each ease presents a unique fact situation and each case has a jury with a unique perspective. This is especially true, as in the instant case, where damages (such as injury to reputation) which are not easily quantified are involved. The difficulty of making a comparison between different facts, different juries, and highly subjective areas of damage is obvious. Consequently, I conclude that determination of whether the damages are excessive should rest solely upon the evidence in the record rather than upon the comparative approach advanced by Gulf Atlantic.
I turn next to the evidence of damages adduced at trial. Four witnesses testified as to Hovater’s and as to Hurlbut’s damages. These witnesses were Hovater and Hurlbut themselves and their respective wives. Hurlbut testified that as a result of an Attorney General’s investigation their agency was placed in receivership and that both he and Hovater were criminally indicted. The files and assets of their agency were seized. Both men were incarcerated in the Harris County jail for approximately twelve hours after their arrest. News of their indictments was carried in both local newspapers and on local television news programs. This was the first time that Hurlbut had been arrested on any matter other than a traffic ticket. He also testified that the emotional stress and the thought of going to jail was “terrible.” Prior to the revocation of his insurance license, Hurlbut stated that during the first four years after the indictment, he was forced to engage in contract labor. He did
Mrs. Hurlbut testified that she first learned that her husband had been placed in receivership when she heard it on the news. The television reports made it appear that her husband “had absconded with a huge sum of money” and “just made it sound real terrible.” There were broadcasts on the six and ten o’clock news and the newspapers carried stories on the matter. One newspaper had placed her husband’s picture on the front page. Her husband was dazed by the situation which beset him. Some friends called to offer support, but others, whom they had expected to call, did not. They had to borrow money from their family to provide sustenance. She stated that her husband was hurt very much because he could not provide for his family and was deeply hurt by the effect the publicity had on his children. After her husband was indicted, there was a new wave of publicity even more intense than the first. Even fewer of their friends called to offer support than before. Before the incident, Mrs. Hurlbut characterized her husband as having many friends and being prominent in the community. In this respect, Hurlbut had been active in his church’s youth organization but quit working in it after the publicity. Also, after he was incarcerated he walked the floor a lot more, “and then he settled down.” His outlook was cynical and withdrawn and he does not trust people as he did previously. She stated that he had gone from Houston to Austin on several occasions in order to try to regain his insurance agent’s license. On these occasions, he had either slept in the car or returned directly home due to lack of money. She testified that for the first time in his life, her husband had to do manual labor. He came home filthy and tired. He was forty-six at the time. She also stated that due to the indictment they were unable to send their children to college.
Hovater testified that he had lost his license to sell insurance and that he had also lost his recording agent’s license. In addition, Hovater testified concerning his incarceration after being indicted. Hovater was arrested a second time and forced to spend the night in jail. His second detention occurred when he was driving home after he and his wife had spent the day on a job cleaning burned apartments. He was taken from his car and searched. After being allowed to go home to change his sooty clothes, he was incarcerated overnight. Like Hurlbut, this was Hovater’s first serious brush with the law. He testified that when the assets of the agency were seized everything was taken, including a portable radio which had been a present from his father-in-law to his wife and a plaque which his children had given him on father’s day. His personal bank accounts and the accounts of his children were seized. He attempted to borrow money and was lent a .thousand dollars by a banker with whom he had dealt for many
Hovater’s wife also testified. She stated that Hovater had worked continuously as an insurance agent since 1957. The revocation of Hovater’s license, the receivership of his agency, and the indictment, according to Mrs. Hovater, made him sick and his condition was just something she couldn’t describe. Her husband had trouble sleeping and was nervous. After the receivership, their church made one of their house payments and they used change from around the house to buy groceries. Mrs. Hovater took courses so that she could go back to work, but she was unable to secure a job close enough to her home. Her husband had to seek work as a manual laborer. Besides the аdverse publicity arising from the receivership, a second wave of publicity occurred when her husband and Hurlbut were indicted. According to Mrs. Hovater, they were heavily in debt at the time of trial, as well as at the time of the receivership. Due to their financial condition, she had been unable to have a needed operation. Her husband had never been an accused, to her knowledge, in a criminal matter other than a traffic ticket. She reiterated the circumstances of her husband’s arrest. Although he still met people “okay,” she indicated that her husband was not as lighthearted as he once was and that he had become cynical. She also stated that he was able to do but a half day’s work in a full day.
I would hold that this evidence is sufficient, from both a legal and factual standpoint, to support the verdict. By concluding that the evidence is sufficient, I also dispose of Gulf Atlantic’s contention that the verdict was excessive. The evidence demonstrates that the lives of Hurlbut and Hovater, as well as their respective families, were totally disrupted by the chain of events set in motion by Gulf Atlantic and the other defendants. Both men were subjected to the public indignation of having their agency seized and placed in receivership by the Attorney General’s office and to further public scorn by being indicted and incarcerated for the first time in their lives. Furthermore, they were unable, at least temporarily, to support their families and were forced to turn to the charity of family and of friends. Both men were forced at middle age to engage in manual labor, with its attendant stresses, to support themselves.
In addition to these stresses, Hovater and Hurlbut were denied the opportunity to engage in a business which had been described by Gulf Atlantic as being highly profitable. Both Hovater and Hurlbut stated that Gulf Atlantic represented to them that trusts of the type they had planned to implement were capable of earning a hundred to a hundred and fifty thousand dollars a year. If Hovater and Hurl-but had worked ten years under the original agreement of 1974, they could have
Gulf Atlantic contends, however, that it is improper to use the representation of potential income in calculating damages. In Gulf Atlantic’s view, the figure is too speculative to form a basis for calculating damages. Under other circumstances I might agree, but because Gulf Atlantic made representations concerning sums in excess of these to induce Hurlbut and Ho-vater to join in this venture with them, Gulf Atlantic should be bound by those sums and the jury should be able to use those sums in calculating damages.
Finally, Gulf Atlantic contends that the jury did not follow the evidence in reaching its verdict. In this respect, Gulf Atlantic argues that because the jury awarded the amount of actual damages requested by Hovater’s and Hurlbut’s attorneys and, because the jury awarded the same amount of damages each to Hovater and Hurlbut, the jury’s conduct was improper. It cannot be presumed that the jury actеd improperly because they found damages as requested by the plaintiffs. Damages, such as mental anguish and injury to reputation, are highly subjective. The fact that the jury used that which the parties requested as a guidepost in assessing damages is hardly surprising. Furthermore, I cannot sanction a rule that a presumption of misconduct arises merely because the jury assessed damages in accordance with the request of the plaintiff. Neither can I presume misconduct because the jury awarded the same sum of damages to each party. Many factors may have contributed to the manner in which the jury assessed damages. For example, the jury may have thought one party was entitled to more than $1,200,000 but limited him to that sum because that is the sum which he requested. This is just one of the many explanations, other than jury misconduct, which could account for the jury's method of assessing damages.
STATUTE OF LIMITATIONS
Gulf Atlantic also asserts as an affirmative defense that plaintiffs’ causes of action for their tort claims for fraud, conspiracy, business disparagement, and malicious interference with contractual relations are barred by the applicable statutes of limitations. Since suit was filed by plaintiffs on January 21,1977, Gulf Atlantic asserts that the primary question is whether Hurlbut and Hovater had knowledge before the meeting with Flanary on January 21, 1975, that Gulf Atlantic’s misrepresentations to plaintiffs were false. The material misrepresentations in this case were: (1) that all necessary approvals had been obtained and, therefore, plaintiffs were legally authorized to sell group health insurance under the master policy; and (2) that defendants intended to underwrite the group health insurance policy which plaintiffs agreed to sell. I would hold that none of plaintiffs’ causes of action were barred because there is evidence that Hurlbut and Hovater did not have knowledge that defendants did not intend to underwrite the policy before January 21, 1975, and that evidence exists to support the jury’s finding that they could not have discovered such lack of intent by the exercise of reasonable diligence.
In fraud cases, limitations begin to run from the time the fraud is discovered or could have been discovered by the defrauded party by the exercise of reasonable diligence. Estate of Stonecipher v. Estate of Butts,
Do you find from a preponderance of the evidence that the plaintiffs knew or by the exercise of ordinary care should have known of the fraud, if any, of the defendants on or before January 20, 1975? [emphasis added]
Furthermore, ample evidence exists to support the jury’s negative answer to this issue. Plaintiffs’ evidence shows that both plaintiffs were repeatedly assured that there were no insurmountable problems in obtaining approval of the master insurance policy and that Gulf Atlantic would secure the necessary approval and follow through with underwriting the policy. Jack Warner, the vice-president of Nationwide Corporation in charge of supervision of Gulf Atlantic, assured plaintiffs that nothing was amiss with the master policy as late as January 21, 1975, shortly before the Attorney General took the plaintiffs into custody. Consequently, it does not matter if, as defendants contend, plaintiffs judicially admitted in their pleadings that they knew in late 1974 that the insurance board had not approved the master policy. The question is not merely whether plaintiffs knew that the policy lacked approval; the question is whether plaintiffs also knew so much that they should have discovered that defendants did not intend to secure the necessary approval and proceed to underwrite the policy. Sufficient evidence existed to support the jury’s finding on this question.
The cases discovered through my research are not to the contrary. In Phillips v. Baker,
Neither is plaintiffs’ tort claim for business disparagement barred by limitations. The majority accepts Gulf Atlantic’s contention that the claim of “disparagement of trade or calling” is actually a libel claim barred by a one-year statute of limitations. As discussed swpra, I do not agree. Business disparagement was first recognized in Brown v. American Freehold Land Mortgage Company of London,
I note, finally, that defendants failed to request special issues on limitations regarding the conspiracy and tortious interference with contract actions and, because there was conflicting evidence on the accrual of these actions, defendants waived the limitations defense as to these actions. Marburger v. Jackson,
MALICE AND PUNITIVE DAMAGES
Appellants next complain of the award of punitive damages and of the jury findings of malice with respect to each of plaintiffs’ causes of action. Gulf Atlantic argues that there is no evidence or insufficient evidence to support the findings of malice. With respect to the award of punitive damages, Gulf Atlantic argues that the award of exemplary damages in the amount of $5,250,001.00 for each plaintiff exceeds the amount of exemplary damages alleged in plaintiffs’ petition, and that it was error to submit and to assess punitive damages against each defendant separately. I cannot agree with these contentions.
The general rule is that to support an award of punitive damages the act complained of must partake of a wanton or malicious nature and it is not sufficient that the act be merely unlawful or wrongful. Ware v. Paxton,
Neither can I agree with Gulf Atlantic’s contention that the issue as to punitive damages should not have been submitted separately as to each defendant. See Schutz v. Morris,
[I]f the defendants or either of them were actuated by malice ... then the plaintiff may ... recover exemplary damages against either or all of the said defendants. It is not necessary, as in the case of actual damages recovered, that all of the defendants should be subject to the same verdict because some of the defendants may have acted without malice, ... and as to such defendants there would be no right to recover exemplary damages.
This language was quoted in Walker v. Kellar,
Gulf Atlantic next argues that the judgment awards punitive damages in excess of that alleged in plaintiffs’ petition. In this respect, plaintiffs alleged that they were “entitled to recover exemplary damages in the sum of Three Million Six Hundred Thousand Dollars ($3,600,000.00) each, against the Defendants herein, jointly and severally.” The jury assessed exemplary damages as follows:
(1) $3,000,000.00 against Gulf Atlantic Life Insurance Co.
(2) $2,000,000.00 against Nationwide Corp.
(3) $100,000.00 against William F. Barnes
(4) $100,000.00 against Kenneth Thompson
(5) $50,000.00 against Jack G. Warner
(6) $1.00 against William Smith
Thus, $5,250,001.00 is the total amount awarded by the jury for each plaintiff. TEX.R.CIV.P. 301 provides:
The judgment of the court shall conform to the pleadings, the nature of the case proved and the verdict ... and shall be so framed as to give the party all the relief to which he may be entitled either in law or in equity, [emphasis added]
Plaintiffs contend that the pleadings are adequate to support this judgment. I do not agree. As I read plaintiffs’ pleadings, the “each” with respect to $3,600,000.00 refers to each plaintiff rather than to each defendant.
Nevertheless, in their motion for judgment on the jury’s verdict, plaintiffs asserted that their pleadings as to exеmplary damages were sufficient but, in the alternative, they moved the trial judge as follows:
In the alternative, if such pleading is not fully sufficient to support a judgment in the amount of the verdict found by the jury, the court should now grant plaintiffs permission to amend their pleadings after the verdict and before judgment to specifically include all amounts found by the jury in response to special issues.
Since the petition, as I construe it, is inadequate to support the judgment, I conclude that the trial judge granted plaintiffs the trial amendment contained in the motion for judgment. See Jones v. State,
In any event, error, if any, was harmless. Post-verdict trial amendments to increase the amount of exemplary damages alleged to comport to the amount found by the jury have been allowed, e.g., Irwin v. Whirley,
The trial court’s action in implicitly granting the trial amendment did not prejudice the defendants, since it did not contravene the rationale of Rule 301. The requirement that the judgment conform to the pleadings is based on the rationale that the defendant is entitled to notice of that which the plaintiff intends to prove. E.g. Mims v. Mitchell,
FAILURE TO PERFECT BILL OF EXCEPTIONS AS TO ATTORNEY ALLEN
Gulf Atlantic contends that the trial court erred in failing to require Ira Lee Allen, an attorney, to testify with respect to conversations with plaintiffs because the attorney-client privilege claimed on behalf of plaintiffs “did not apply or had been waived.” I would hold that Gulf Atlantic has failed to preserve error. Gulf Atlantic attempted to elicit testimony from Allen which referred to conversations which Allen had with Hovater. and Bengel, who was Agency Associates’ office manager. Hurl-but and Hovater objected to these questions, claiming that they were privileged communications between attorney and client. The objection was sustained. Gulf Atlantic was later given an opportunity by the trial court to perfect a bill of exceptions on the excluded testimony. Hurlbut and Hovater requested, however, that Allen not be required to answer Gulf Atlantic’s questions in open court. The only way the privilege could be protected, Hovater and Hurlbut asserted, would be for Allen to answer Gulf Atlantic’s questions in camera. The trial judge afforded defendants this opportunity but Gulf Atlantic refused to perfect its bill under these conditions.
VOIR DIRE AND JURY ARGUMENT
Appellants assert that the trial court erred by overruling their objection to plaintiffs’ final argument and, consequently, advising the jury of the effect of their answer to special issue 27, which reads:
Do you find from a preponderance of the evidence that the Plaintiffs knew or by the exercise of ordinary care should have known of the fraud, if any, of the Defendants on or before January 20, 1975? The argument objected to was:
MR. AYRES: Now, we’ll go through those issues with you in a general way, and suggest to you how we think they should be answered, but I want to go to the last issue in the Court’s Charge first, because to me, that is the issue, if I was on the jury, I would want to know about first, and that is this issue about when the Defendants — pardon me, when the Plaintiffs knew or should have known about the fraud of the Defendants. The Court asks you a very important question there and there is nothing that the Defendants would like better, regardless of your answers to every other issue in the Charge—
MR. COUSINS: Your Honor please, he is telling the jury the effect of their answer and we object to it.
THE COURT: Overrule the objection.
MR. AYRES: There is nothing that the Defendants would like better, ladies and gentlemen, than for you to come in with a verdict that the people of Dallas County can be proud of and then on that last issue answer “We do.”
MR. COUSINS: Your Honor again, he is instructing the jury, telling them the effect of their answer, we ask that you instruct him to not make that kind of an argument, that is exactly what he is doing.
THE COURT: Well, you better argue the evidence or your position on that issue and not directly referring to—
MR. COUSINS: He is saying what I would like or not like, Your Honor, that is my problem.
THE COURT: All right. Tell them what you would like them to do.
MR. AYRES: Ladies and Gentlemen, we think the evidence in this case, justifies one answer, “We do not.” It is a kind of a tragedy to to get into the national championship and fumble right on the goal line, isn’t it? That is what you will do if you will answer that question “We do.”
MR. COUSINS: Your Honor please, we move for a mistrial, the man obviously is telling the jury the effect of their answer, he is deliberately avoiding the Court’s ruling.
THE COURT: Overrule the objection.
Although I agree that the “goal-line fumble” argument was error, Cf. Hurley v. McMillan,
Next appellants complain of a jury argument which they contend appealed to the jury’s sympathy and bias through stressing the financial disparity of the parties. I need not address the precise argument made because no objection based on this ground was made to the trial court and thus error, if any, is waived. Houston & T. C. Ry. Co. v. Terrell,
Appellants also argue that the plaintiffs’ opening statement referred to certain immaterial yet highly prejudicial matters. The record reveals that plaintiffs’ counsel stated his belief that the evidence would show that Gulf Atlantic attempted to bribe a public official, to which an objection was made and sustained. No further relief was requested. Under such circumstances, error, if any, is cured. Armellini Express Lines of Florida, Inc. v. Ansley,
JURY MISCONDUCT
Gulf Atlantic contends that “the trial court erred in failing to grant defendant’s motion for new trial on the grounds of jury misconduct as established by the testimony.” The basis of Gulf Atlantic’s argument is that certain jurors related personal experiences during the jury’s deliberations. Because it appears that Gulf Atlantic probably did not suffer harm by any misconduct which may have occurred, I would overrule Gulf Atlantic’s contention.
Under TEX.R.CIY.P. 327, in order to prevail in a motion for new trial on the basis of jury misconduct, a movant has the burden to prove that (1) misconduct occurred; (2) it was material misconduct; and (3) based on the record as a whole, the misconduct probably resulted in harm to them. Flores v. Dosher,
The alleged acts of misconduct in this case occurred while the jury was deliberating on the issue of actual damages. Hurl-but and Hovater testified at trial that if their arrangement with Gulf Atlantic had come to fruition, they would have earned a hundred to a hundred and fifty thousand dollars a year. On motion for a new trial, a juror named Maahs testified to three instances where other jurors had related personal experiences during deliberations. The first comment which Maahs related was allegedly made by Jack Jeffers, who was foreman of the jury. According to Maahs, Jeffers stated that he had a neigh
At the conclusion of the hearing, the trial court made the following findings of fact and conclusions of law:
FINDINGS OF FACT
1.
During the discussion on the issue of actual damages, the Jury was considering testimony of Mr. Hurlbut and Mr. Hovater that they had been told by the Defendants that they could expect to make between $100,000.00 and $150,-000.00 per year under the insurance program of the Defendants. During this discussion Juror, Jackie Jeffers, stated in effect that it was his opinion that earnings of $70,000.00 or $80,000.00 per year would not be unusual.
2.
This statement was made as an opinion and at a time when the Jury was considering the testimony of Hurlbut and Ho-vater. Said statement was not made as an expression of fact.
3.
No other statements concerning earnings of agents were made by any juror except those based on the evidence produced at the trial.
CONCLUSION OF LAW
1.
A discussion of credibility of Plaintiff’s testimony of expected earnings of $100,-000.00 to $150,000.00 per year under Defendants’ insurance plan was consistent with the Court’s inquiry concerning actual damages and, therefore, the Juror’s expression of an opinion on the issue was not misconduct in this context.
2.
Such expression of opinion was not material in the decision rendered by the Jury.
3.
That based on the record as a whole, the expression of an opinion by the Juror, Jackie Jeffers, did not result in probable harm to the Defendants.
4.
Defendants failed to meet the burden required by Rule 327, Texas Rules of Civil Procedure.
First, my review of the record indicates that the trial court was correct in finding no instance of jury misconduct other than Jeffer’s comments about the income of insurance agents. Second, I would conclude, as the trial court did, that these comments did not result in an improper verdict because the evidence at trial established sums far in excess of Jeffers’ estimate of an insurance agent’s annual income.
Accordingly, I would hold that, based on the record as a whole, Gulf Atlantic was not likely harmed by the misconduct of juror Jeffers. There was testimony of a much higher earning potential by Hovater and Hurlbut. Additionally, the comments of only one juror were involved and at least a part of his comments were expressed in the form of an opinion. Consequently, I would hold that the injection of personal knowledge by Jeffers, although improper, does not require reversal of this case.
I would affirm the judgment of the trial court.
. The normal procedure in the insurance industry is for the trust to have an administrator with powers to administer the affairs of the trust. This administrator then obtains a licensed insurance company to underwrite a master policy to the trust, which must be approved by the insurance commission. The trust then issues individual certificates to the employees covered.
. I agree with the majority that under a cause of action for business disparagement plaintiffs may recover, as actual damages, only special damages for pecuniary loss to business interests. Neither damages to reputation nor consequential mental distress are recoverable in a disparagement action. (As discussed infra, those damages are recoverable by Hurlbut and Hovater under their other causes of action). Punitive damages, however, may be recovered in an action for disparagement. See Walker v. Ruggles,
. I disapprove of the majority's conclusion that an absolute privilege need not be pleaded as an affirmative defense (nor even brought to the attention of the trial judge). This conclusion apparently derives from a statement made by the supreme court in Denton Publishing Co. v. Boyd,
. Walker v. Ruggles held that a plaintiff in a slander of title action was not precluded from recovering damages merely because he failed to prove the loss of a specific pending sale due to the defendant's disparaging statements. The supreme court has since held that a plaintiff is required to prove the loss of a specific sale or sale in order to recover in a slander of title action. A. H. Belo Corp. v. Sanders,
. See Southwestern Investment Co. v. Neeley,
. See concurring opinion of Justice Kilgarlin in Akin v. Dahl,